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A General Approach to Welfare Measurement through National Income Accounting

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Author Info
Geir Asheim ()
Wolfgang Buchholz ()

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Abstract

We develop a framework for analyzing national income accounting using a revealed welfare approach that is sufficiently general to cover, e.g., both the standard discounted utilitarian and maximin criteria as special cases. We show that the basic welfare properties of comprehensive national income accounting, which were previously ascribed only to the discounted utilitarian case, in fact extend to this more general framework. In particular, it holds under a wide range of circumstances that real NNP growth (or equivalently, a positive value of net investments) indicates welfare improvement. We illustrate the applicability of our approach by considering resource allocation mechanisms in the Dasgupta-Heal-Solow model of capital accumulation and resource depletion.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 831.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_831

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Related research
Keywords: national income accounting; dynamic welfare;

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Find related papers by JEL classification:
C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
D60 - Microeconomics - - Welfare Economics - - - General
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Blackwell Publishing, vol. 96(2), pages 257-65.
  2. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-74, December. [Downloadable!] (restricted)
    Other versions:
  3. Burmeister, Edwin & Hammond, P J, 1977. "Maximin Paths of Heterogeneous Capital Accumulation and the Instability of Paradoxical Steady States," Econometrica, Econometric Society, vol. 45(4), pages 853-70, May. [Downloadable!] (restricted)
  4. Asheim, Geir B. & Weitzman, Martin L., 2001. "Does NNP growth indicate welfare improvement?," Economics Letters, Elsevier, vol. 73(2), pages 233-239, November. [Downloadable!] (restricted)
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  5. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 333-56, May.
  6. Pemberton, Malcolm & Ulph, David, 2001. " Measuring Income and Measuring Sustainability," Scandinavian Journal of Economics, Blackwell Publishing, vol. 103(1), pages 25-40, March. [Downloadable!] (restricted)
  7. Hartwick, John M., 1990. "Natural resources, national accounting and economic depreciation," Journal of Public Economics, Elsevier, vol. 43(3), pages 291-304, December. [Downloadable!] (restricted)
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  8. Dixit, Avinash & Hammond, Peter & Hoel, Michael, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Blackwell Publishing, vol. 47(3), pages 551-56, April. [Downloadable!] (restricted)
  9. Cairns, Robert D., 2000. "Sustainability accounting and green accounting," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 49-54, February. [Downloadable!]
  10. Dasgupta, Partha & M Ler, Karl-G Ran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 69-93, February. [Downloadable!]
  11. Asheim, Geir B, 1988. "Rawlsian Intergenerational Justice as a Markov-Perfect Equilibrium in a Resource Technology," Review of Economic Studies, Blackwell Publishing, vol. 55(3), pages 469-83, July. [Downloadable!] (restricted)
  12. Dasgupta, Partha, 2001. "Valuing Objects and Evaluating Policies in Imperfect Economies," Economic Journal, Royal Economic Society, vol. 111(471), pages C1-29, May. [Downloadable!] (restricted)
  13. Sefton, J. A. & Weale, M. R., 1996. "The net national product and exhaustible resources: The effects of foreign trade," Journal of Public Economics, Elsevier, vol. 61(1), pages 21-47, July. [Downloadable!] (restricted)
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  14. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  15. Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February. [Downloadable!] (restricted)
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  16. Asheim, Geir B. & Buchholz, Wolfgang & Tungodden, Bertil, 2001. "Justifying Sustainability," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 252-268, May. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Karp, Larry & Tsur, Yacov, 2007. "Climate Policy When The Distant Future Matters: Catastrophic Events With Hyperbolic Discounting," Discussion Papers 7181, Hebrew University of Jerusalem, Department of Agricultural Economics and Management. [Downloadable!]
    Other versions:
  2. Asheim, Geir B., 2005. "Can NNP be used for welfare comparisons?," Memorandum 24/2005, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  3. Asheim, Geir B. & Buchholz, Wolfgang & Hartwick, John M. & Mitra, Tapan & Withagen, Cees, 2005. "Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints," Memorandum 23/2005, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  4. Kirk Hamilton & Giovanni Ruta & Liaila Tajibaeva, 2006. "Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(4), pages 517-533, August. [Downloadable!] (restricted)
    Other versions:
  5. Olfa Jaballi & Sebnem Sahin, 2005. "Towards sustainable lignite consumption in Turkey and a welfare analysis," Cahiers de la Maison des Sciences Economiques v05039, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
    Other versions:
  6. Kirk Hamilton & Giovanni Ruta, 2009. "Wealth Accounting, Exhaustible Resources and Social Welfare," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(1), pages 53-64, January. [Downloadable!] (restricted)
  7. Francisco Alvarez-Cuadrado & Ngo Van Long, 2007. "A Mixed Bentham-Rawls Criterion For Intergenerational Equity: Theory And Implications," Departmental Working Papers 2007-03, McGill University, Department of Economics. [Downloadable!]
    Other versions:
  8. Asheim, Geir, 2003. "Green national accounting for welfare and sustainability: A taxonomy of assumptions and results," Memorandum 31/2002, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  9. Asheim, Geir, 2003. "Green national accounting with a changing population," Memorandum 06/2003, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
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